Car insurance prices could dramatically fall ....

[TonylUK]

Of course they would have no reason to request unless an offence had been committed or serious accident happened. I don't believe there would be an automatic harvesting of data to expose an offence. Well, not just yet anyway ...

They can't just sift through it, that's the fun of GDPR. They would need a specific reason and even if they did rules state under GDPR that the individual involved must be asked for their approval first. However, you have this Data Protection Act 2018 - Criminal Offences | The Crown Prosecution Service

What is the LED?

Part 3 of the DPA 2018 transposes the EU Data Protection Directive 2016/680 (Law Enforcement Directive) into domestic UK law and sets out the requirements for the processing of personal data for criminal ‘law enforcement purposes’.

Which leads to this:
Guide to Law Enforcement Processing

At a glance

Part 3 only applies to competent authorities (or their processors) processing for criminal law enforcement purposes.

Part 3 only applies to competent authorities processing for law enforcement purposes. So, it applies, but is not limited, to:

the police, criminal courts, prisons, non-policing law enforcement; and

any other body that has statutory functions to exercise public authority or public powers for any of the law enforcement purposes.

So it's quite hard to use our data for any other purpose unless anonymized or they have our consent, or falls under the above sections

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[MikeInWimbledon]

CAR INSURANCE prices could soon be dramatically reduced as insurance companies admit new technology could revolutionise the sector. Car insurance prices could dramatically fall as technology firms warn of massive changes

Hardly a reliable source, but I don't know why anyone would disagree.
More sophisticated article here: How data is revolutionising car insurance

We've already seen massive cost savings as a result of all kinds of tech / big data applications in other areas. Of course Big Data is going to revolutionise "our" understanding of risk, and the causes of risk, when it comes to insurance.

Short distances, cautious driving, regular patterns etc all add up to fewer accidents. Today's "No claims bonus" is a pretty rough and ready way of taking that into account. Not only will the insurance companies be able to manage those risks more precisely, but also they'll be feeding the data back to encourage drivers to moderate / change their behaviour, and feed information to the traffic authorities to address accident blackspots and issues around times of day and other risks.

And then there are still big economies around simple admin workflow, and reduction of the fraud which probably costs about 10% of your annual insurance premium.

Will we "see" the saving? Nah, we'll just spend the money on better service. Like colour TV's or smartphones, the tech simply makes it easier to buy....more tech.

 

[400ixl]

Insurance costs are driven by costs. Be those overheads, of claims losses. Basically General insurance is how can you take money in and re-invest it to make money on it before you have to pay it out. Hence why a lot of insurance price variation is based around the stock market and its typical 7 year cycles.

Now if the cost of claims go down due to technology, be it black boxes influencing behaviour, or Artificial intelligence being used to stop crashes in the first place, then this will clearly have an impact on the price they need to charge. Actuarial's are very good at understanding trends which are driving costs and applying the right distribution of price to those trends.

So if telematics customers were on a downward trend of accidents and they could see it is because of behavioural changes in a certain demographic then they would apply a discount to that demographic using a telematics box. If it was a case of autonomous vehicles having the sensors and controls in place to take control and avoid accidents they would understand the vehicles that have this capability and again apply the discounts to those subsets.

As such, if you are not using a telematics box or a vehicle with autonomous features you would be unlikely to see the same level of discount. You may still see some as there would be a drop in accidents overall of which many would have involved people not in the subgroups. So they may see a drop in price as a result of not being a 3rd party in an accident.

Technology will absolutely have a further effect on premiums over the next decade or two. That's a long time and technology will be still gaining pace.

It will also bring in a whole new dimension to consider. If two fully autonomous vehicles collide, who's fault is it? The owners, the manufacturers?

 

[Rory]

It's not just autonomous vehicles - thinks like autonomous braking already fitted to quite a few cars has made quite a big difference.

Against that, if a car does get damaged the repair costs seem instance these days - I've seen costs for a scraped wing on a Mercedes that was £2.5K. A door dent that was a couple of £K.

And break a windscreen now and the camera has to be realigned etc, at a cost of several hundred pounds. VW demand that the wheel alignment is checked for their system!

 

[Dryce]

We've already seen massive cost savings as a result of all kinds of tech / big data applications in other areas. Of course Big Data is going to revolutionise "our" understanding of risk, and the causes of risk, when it comes to insurance.

You need to subtract a certain amount of hype and snake oil.

Data mining has been around as a term for 20 years. Big Data? Something like 8 years. I see companies hiring 'data scientists' in droves in the last 2 years - I suspect very few of them will return more value than the cost of employing them.

 

[markjay]

..Data mining has been around as a term for 20 years..

One of my clients was doing just that... in 1995.

 

[MikeInWimbledon]

One of my clients was doing just that... in 1995.

I turned down a strategy consulting job at Accenture doing it in 1987. A colleague joined them instead, initially working for the big retail chains, and he's still doing it 32 years later.

We can see Big Data all around us, as the retailers and political parties funnel their advertising towards our pattern of activities.

If you think about it, car insurance premiums and No Claims Discounts are a very crude way of managing past performance and risk. Given the appetite to reduce costs, these databases give all kinds of opportunity to tailor marketing and policy prices.

Look at what's happened to multi-car policies and online quotations. I added a car to my Aviva policy last week and it took me less than 10 minutes to complete the whole thing from quotation to implementation, without a customer service employee touching the transaction at all.

 

[TonylUK]

Yup, insurance is far easy these days. Allianz spent millions on their new retail sites, only to dump car insurance totally. Just proves decent companies can't make a profit, or it's hard too.

I do cyber security and GDPR. I spent a day with their insurance claims investigation team. My god, the crap people try to put through. "ohh, someone hit me in three places at the local supermarket.." pull up the footage, not a thing. Some of the stories people pull were amazing.

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[Dryce]

We can see Big Data all around us, as the retailers and political parties funnel their advertising towards our pattern of activities.

It has underperformed - and my experience is taht there are some pretty shifty companes out there trying to convince clients that they have a solution.

The apocryphal story is Tesco. The Club Card was hyped for years. Huge amounts of data. Tesco would use this to rule British retailing. The value of the Dunnhumby which supposedly gave them that edge was set high. The Tesco's business halo fell. And the value of Dunnhumby turned out to be rather less. So what is / was the real value of all that customer data? Well in simple terms - not all it was cracked up to be. And the up and coming supermarkets - Lidl and Aldi - do they have a loyalty card?

Look at what's happened to multi-car policies and online quotations. I added a car to my Aviva policy last week and it took me less than 10 minutes to complete the whole thing from quotation to implementation, without a customer service employee touching the transaction at all.

10 minutes for you to enter the data. And what? A second to do some lookups and generate a quote.

Getting a quote in a brokers office 40 years ago for my motorbike didn't take that long. They looked up some books and tables from Norwich Union and - a number would be worked out. Under 5 minutes? Though that involved a paid individual doing the work.

Adding another bike to the policy took 0 seconds. One of the advantages of the old Rider policy. Makes multi-car look complicated and a hassle.

What is different now isn't the 'big data' it's the ability to collate quotes. Rather than pick companies and ask for quotes - or depend on a broker to know whch selection of insurers they represent might be best - we have comparison sites.

My suspicion is that the differentiator selling insurance isn't just about refining risk and quotes - it's about yield management. The 'big data' advantage to be gained in the sector isn't about reducing the cost of insurance - it's about determining how much customers will pay. Fraud detection may also be factor - but I suspect it's some way behind working out how to set margins.

 

[markjay]

I would suggest that the brokers' ability to tailor a quote for your particular risk-profile based on manually looking-up some tables in books published periodically was very limited. Which is why it took them 5 minutes.

The amount of statistical data available these days to insurers is vast, it would have taken them hours if not days to calculate your premium manually in the same way that the computer does.

In theory, safe drivers should benefit from this by paying lower premiums, while poor drivers or reckless drivers pay more. However, the question remains if this is indeed the case.

 

[Deleted member 6183]

You have to laugh.

Insurance companies have driven direct business which is a lot cheaper to acquire than broker business by getting someone else to do all the work.

That someone else is, of course, us!

As an aside we are all receiving no advice in the process.

Bargain.

 

[Dryce]

The amount of statistical data available these days to insurers is vast, it would have taken them hours if not days to calculate your premium manually in the same way that the computer does.

And yet in amongst all this supposed magic - you get a renewal which is high - you phone them and the proce drops.

I can't help feeling that most of the big data analysis isn't about the risk pricing element but about that yield. So the numbers crunched are more about finding the highest number that you will accept.

Why?

Because the underlying insurance model is pretty well understood - and it's all about packaging and selling that for maximum profit.

 

[MikeInWimbledon]

The apocryphal story is Tesco. The Club Card was hyped for years. Huge amounts of data. Tesco would use this to rule British retailing. The value of the Dunnhumby which supposedly gave them that edge was set high. The Tesco's business halo fell. And the value of Dunnhumby turned out to be rather less. So what is / was the real value of all that customer data? Well in simple terms - not all it was cracked up to be. And the up and coming supermarkets - Lidl and Aldi - do they have a loyalty card?
10 minutes for you to enter the data. And what? A second to do some lookups and generate a quote.
Getting a quote in a brokers office 40 years ago for my motorbike didn't take that long. They looked up some books and tables from Norwich Union and - a number would be worked out. Under 5 minutes? Though that involved a paid individual doing the work.

So Dryce, if Customer Loyalty cards are useless, why is every major retailer using them: Amazon Prime, Waitrose, John Lewis, Tesco, Marks, Nectar, Esso, and the Airlines? Is it because Retailers, like Amazon, are stupid?

Did you actually live in an insurance office, when it took you only 10 minutes to get competitive quotes in your pyjamas?
We had to drive into town, visit an office, during 9-5pm opening hours, get quotes from clerks who who fill in questionnaires, look up quotes from books provided by each insurer, give you printed details, then fill in forms, and make the payment.

That didn't take 10 minutes, it took us a couple of hours, and involved a bunch of clerks, filling in forms, looking up your file for NCB details, sorting through different books of quotes, in completely different formats, and as well as a bunch of clerks processing the transaction in several differrent offices - from the independent insurance agent, all the way through to the actual insurer, filling in, filing, shuffling etc.

Today, all that information is pre-loaded into your insurance account. The workflow happens without any clerical involvement. It's a massive cost saving and a massive increase in control.

And adding a third 5.5 litre car, doing 10,000 miles a year onto you your policy didn't cost £25 (the 1970's equivalent of £150 today)

.

 

[Dryce]

So Dryce, if Customer Loyalty cards are useless, why is every major retailer using them: Amazon Prime, Waitrose, John Lewis, Tesco, Marks, Nectar, Esso, and the Airlines? Is it because Retailers, like Amazon, are stupid?

This is good question.

But you missed the one major point. I'm not saying that this is all useless - I'm saying it's overhyped.

So a customer loyalty card is a good example. In the case of Tesco the customer loyalty card became some super magic sauce that apparently because a major unique for Tesco and the value of the data they supposedly had on their customers became another major unique. The business was coincidentally very successful at the time and as a result the whole Club Card thing got talked up anfd totally hyped. What retailer could ignore that? The value of the data handling business itself end up on their balance sheet. Double bubble. And then came the fall - the profits were not all they were supposed to be, the core business was questioned, the data handling division value has presumably had to be written down substantially. So double trouble.

Meanwhile .... Aldi and Lidl emerge as major competitors in that sector. Ignoring loyalty cards. Ignoring data hype. Focusing on basic retailling, cost management, and value.

The problem with the Club Card was it made every major retailer get paranoid that they too needed magic sauce because Tesco looked like they were leveraging so much from it.

So what's a loyalty card scheme worth. Well 10 years ago - apparently it was worth a lot. What's it worth now? Well something. But nowhere near as much.

 

[st13phil]

So what's a loyalty card scheme worth. Well 10 years ago - apparently it was worth a lot. What's it worth now? Well something. But nowhere near as much.

It's interesting to note that Tesco has recently introduced their Clubcard Plus scheme, which provides discounts on shopping bills in exchange for a monthly subscription. This is similar to the Amazon Prime model which has demonstrated that when consumers are paying for their “loyalty scheme”, they’re more likely to be, err, loyal. The logical conclusion is that the original Tesco scheme was not driving as much loyalty as they’d hoped.

 

[MikeInWimbledon]

Loyalty cards are a $75 billion global industry You may diss Tesco or Amazon, but you'll find loyalty cards being used in all the major markets.

This on top of $50 billion worth of CRM systems, and $150 billion worth of "customer engagement" (Google / FB etc)

Call it about 4% of retail revenues -ish.

.

 

[MikeInWimbledon]

By coincidence, here's an example from this afternoon's emails.

A couple of weeks ago I bought three of the wines on this Waitrose mail shot for typically £15 a pop, less a case discount.

What has the Loyalty card tech enabled them to do? Target me with 33% discount offers to get more wine out before Christmas. Online ordering only, not available in-store. Without that tech, I either wouldn't have bought more, or would have bought more elsewhere....

"Hey, Who am I to disagree?"

 

[Chandlerslad]

I live in hope!
I’ve just had my renewal quote in and it’s enough to make me consider buying a mini.
Over £1400 for a 2004 e240!